Latent association graph inference for binary transaction data

A novel approach to the problem of statistical inference for multivariate binary transaction data is proposed. A fundamental question that arises from this data, often referred to as market basket data, is how the items relate to one another. These relationships are naturally expressed by a graph and transactions can be modeled as samples of cliques from this association graph. A hierarchical model is developed that follows from this generative idea, along with an MCMC sampling procedure that handles large datasets and allows inference on a broad set of parameters. This model provides a sparser representation of associations between items as compared with frequent itemset mining (FIM) output, without sacrificing predictive accuracy. Additionally, by allowing inference on a broad set of parameters, the model provides a deeper level of insight into transaction data. Empirical results are provided on applications of this model to simulated data and real transaction data from Instacart.